Freight railroad infra.

AN ACT Relating to providing incentives to improve freight 1
railroad infrastructure; adding new sections to chapter 82.04 RCW; 2
adding a new section to chapter 82.08 RCW; adding a new section to 3
chapter 82.12 RCW; adding new sections to chapter 82.16 RCW; creating 4
new sections; providing effective dates; and providing expiration 5
dates. 6
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:7
NEW SECTION. Sec. 1. The legislature finds that railroads play 8
a crucial role in economic development, serving nearly every 9
industrial, wholesale, retail, and resource-based sector in 10
Washington's economy. The legislature further finds that freight 11
railroad infrastructure is an essential link in the supply chain and 12
provides an efficient way to connect Washington's economy to national 13
and international markets. The legislature further finds that 14
maintenance and improvements to the railroad system are needed to 15
support modern 286,000 pound railcars, foster economic development, 16
increase infrastructure resiliency, avoid supply chain disturbances, 17
and meet carbon reduction goals for transportation greenhouse gases. 18
The legislature intends to provide incentives to the rail industry 19
that can lead to a more effective short line rail system.20
H-0103.2
HOUSE BILL 1058
State of Washington 69th Legislature 2025 Regular Session
By Representatives Barkis, Leavitt, Corry, Fey, Connors, Simmons,
Orcutt, Street, Griffey, Reed, Ybarra, Nance, Low, Bernbaum, Cortes,
Springer, Santos, Ryu, Schmidt, Marshall, Jacobsen, Richards, Callan,
Doglio, Timmons, Barnard, Berg, Salahuddin, Reeves, and Donaghy
Prefiled 12/13/24. Read first time 01/13/25. Referred to Committee
on Finance.
p. 1 HB 1058
NEW SECTION. Sec. 2. A new section is added to chapter 82.04 1
RCW to read as follows: 2
(1) A credit is allowed against taxes due under this chapter for 3
expenditures made by an eligible taxpayer pursuant to subsection (2) 4
of this section. The credit is subject to a maximum annual credit 5
amount set forth in subsection (3) of this section.6
(2) Qualified expenditures incurred by an eligible taxpayer may 7
be used to generate a credit for the following amounts:8
(a) For qualified short line railroad maintenance expenditures, a 9
credit is allowed against the taxes due under this chapter in an 10
amount equal to 50 percent of the qualified short line railroad 11
maintenance expenditures. The amount of the credit earned in a 12
calendar year may not exceed an amount equal to $2,500 multiplied by 13
the number of miles of railroad track owned or leased in the state by 14
the eligible taxpayer as of the close of the calendar year.15
(b) For qualified new rail development expenditures, a credit is 16
allowed against the taxes due under this chapter in an amount equal 17
to 50 percent of the new rail development expenditures of an eligible 18
taxpayer. 19
(c) For qualified railroad modernization and rehabilitation 20
expenditures, a credit is allowed against the taxes due under this 21
chapter in an amount equal to 50 percent of the qualified railroad 22
modernization and rehabilitation expenditures by an eligible 23
taxpayer. 24
(3) The total credit amount approved under subsection (2) of this 25
section and section 6(2) of this act may not exceed $500,000 for each 26
eligible taxpayer in a calendar year. Credits are available on a 27
first-in-time basis. The department must disallow any credits, or 28
portions thereof, that would cause the total amount of credits 29
approved under subsection (2) of this section and section 6 (2) of 30
this act to exceed $8,000,000 during any calendar year.31
(4) The credit claimed may not exceed the tax that would 32
otherwise be due under this chapter. Refunds may not be granted in 33
the place of credits. Any amount of credit earned under this section 34
not claimed by the taxpayer in one calendar year may be carried 35
forward for no more than five calendar years immediately following 36
the year that the credit was earned. 37
(5)(a) An eligible taxpayer may transfer all or a portion of the 38
credit approved under this section to any taxpayer subject to the tax 39
imposed under this chapter at any time during the calendar year in 40
p. 2 HB 1058
which the credit is approved by the department and for five calendar 1
years following the year that the credit is approved.2
(b) To transfer all or any portion of an approved credit, the 3
taxpayer originally allowed the credit, and the subsequent 4
transferee, must jointly file a credit transfer application with the 5
department. The application must include: 6
(i) The names, addresses, and taxpayer identification numbers of 7
the parties to the transfer; 8
(ii) The amount of the credit being transferred;9
(iii) The year the credit was originally approved by the 10
department for use by the transferring taxpayer; 11
(iv) The tax year or years for which the credit may be claimed; 12
and 13
(v) Any other information or documents the department may 14
require. 15
(c) No credit or portion thereof may be transferred more than 16
once. 17
(6) The department must administer the credit. To claim or 18
transfer a credit under this section, the taxpayer applying must 19
complete an application for credit based on qualified expenditures 20
incurred by the eligible taxpayer the previous calendar year. The 21
department must rule on applications within 60 days of receipt. The 22
department may extend the time of processing an application upon 23
notice to the taxpayer and by providing the taxpayer an explanation 24
on why the application processing cannot be completed on time.25
(7) For purposes of this section, the following definitions 26
apply: 27
(a) "Class I railroad" means a railroad that is classified by the 28
United States surface transportation board as a class I railroad, as 29
defined in 49 C.F.R. Sec. 1201.1-1(a), as in effect on January 1, 30
2025. 31
(b) "Eligible taxpayer" means: 32
(i) Any railroad subject to the tax under this chapter that is 33
classified by the United States surface transportation board as a 34
class II or class III railroad, as defined in 49 C.F.R. Sec. 35
1201.1-1(a), as in effect on January 1, 2025; 36
(ii) Any railroad owned by a port, city, or county in the state 37
of Washington; or 38
(iii) Any owner or lessee of rail siding, industrial spur, or 39
industry track, if the rail siding, industrial spur, or industry 40
p. 3 HB 1058
track is located on or adjacent to a class II or class III railroad 1
in the state of Washington. 2
(c) "Industrial spur" means a secondary track used by railroads 3
and customers at a location to load and unload railcars without 4
interfering with other railroad operations. 5
(d) "Qualified new rail development expenditures" means 6
expenditures for new rail development by an eligible taxpayer, which 7
includes the construction of new track, industrial leads, switches, 8
industrial spurs, sidings, rail loading docks, and transloading 9
structures involved with providing rail services to new customer 10
locations or existing customer expansions in the state by an eligible 11
taxpayer. 12
(e) "Qualified railroad modernization and rehabilitation 13
expenditures" means expenditures by an eligible taxpayer to upgrade 14
less than 90 pound rail and switches, 286,000 pound capacity rail 15
upgrades to the mainline track, rail and tie replacement projects, 16
track capacity enhancements, bridge rehabilitation or bridge 17
replacement projects, natural disaster projects, or other track-18
related projects determined to enhance or modernize the existing 19
track infrastructure in the state by an eligible taxpayer.20
(f) "Qualified short line railroad maintenance expenditures" 21
means expenditures for railroad infrastructure maintenance including, 22
but not limited to, rail, ties, tie plates, joint bars, fasteners, 23
switches, ballast, subgrade, roadbed, bridges, industrial leads, 24
sidings, signs, safety barriers, crossing signals and gates, and 25
related track structures owned or leased by a class II or class III 26
railroad. 27
(g) "Siding" means a short section of track, distinct from a 28
mainline, branch line, or spur, connected by switches to a main track 29
and used for storage, passing, or other purposes. 30
(8) Qualified expenditures, as defined in subsection (7)(d), (e), 31
and (f) of this section, do not include expenditures used to generate 32
a federal tax credit or expenditures funded by a state or federal 33
grant. 34
(9) This section does not apply to class I railroads or short 35
line railroads owned by a class I railroad or any of its 36
subsidiaries. 37
(10) No person may claim a credit against taxes due under both 38
this chapter and chapter 82.16 RCW for the same qualified 39
expenditures. 40
p. 4 HB 1058
(11) To claim a credit under this chapter, a taxpayer must 1
electronically file with the department all returns, forms, and other 2
information the department requires in an electronic format as 3
provided and approved by the department. Any return, form, or 4
information required to be filed in an electronic format under this 5
section is not filed until received by the department in an 6
electronic format. For purposes of this subsection, "returns" has the 7
same meaning as "return" in RCW 82.32.050. 8
(12) The ability to earn credits for qualifying expenditures 9
under this section expires January 1, 2037. No credit may be claimed 10
on tax returns filed for reporting periods beginning on or after 11
January 1, 2043. 12
NEW SECTION. Sec. 3. A new section is added to chapter 82.04 13
RCW to read as follows: 14
(1) Any company that recycles railroad material is eligible for a 15
credit as provided in this section if, on or after the effective date 16
of this section, the company transfers to an eligible taxpayer rail, 17
ties, tie plates, joint bars, fasteners, switches, ballast, or other 18
equipment or materials that are part of the rail infrastructure to be 19
installed on tracks used by class II and class III railroads.20
(2) The credit is equal to the fair market value of the donated 21
materials used for track maintenance, expansion, or modernization. 22
Materials must be given to a qualifying recipient without 23
consideration to receive a credit. The department must provide in 24
rule a standard for determining the fair market value of donated 25
materials under this section. 26
(3)(a) A company that recycles railroad material may transfer all 27
or a portion of the credit earned under this section to any taxpayer 28
subject to the tax imposed under this chapter at any time during the 29
year in which the credit is earned and five years following the year 30
that the credit is earned. 31
(b) To transfer all or any portion of a credit earned, the 32
taxpayer originally allowed the credit and the subsequent transferee 33
must jointly file a credit transfer application with the department. 34
The application must include: 35
(i) The names, addresses, and taxpayer identification numbers of 36
the parties to the transfer; 37
(ii) The amount of the credit being transferred;38
p. 5 HB 1058
(iii) The year the credit was originally earned by the 1
transferring taxpayer; 2
(iv) The tax year or years for which the credit may be claimed; 3
and 4
(v) Any other information or documents the department may 5
require. 6
(c) No credit or portion thereof may be transferred more than 7
once. 8
(d) No credit transfer applications under (b) of this subsection 9
(3) may be submitted for qualifying materials donated after December 10
31, 2037. 11
(4) The department must administer the credit.12
(5) The credit claimed may not exceed the tax that would 13
otherwise be due under this chapter. Refunds may not be granted in 14
the place of credits. Any amount of credit earned under this section 15
not claimed by the person in one calendar year may be carried forward 16
for no more than five calendar years immediately following the year 17
that the credit was earned. 18
(6) For purposes of this section, the following definitions 19
apply: 20
(a) "Class I railroad" means a railroad that is classified by the 21
United States surface transportation board as a class I railroad, as 22
defined in 49 C.F.R. Sec. 1201.1-1(a), as in effect on January 1, 23
2025. 24
(b) "Eligible taxpayer" means: 25
(i) Any railroad subject to the tax under this chapter that is 26
classified by the United States surface transportation board as a 27
class II or class III railroad, as defined in 49 C.F.R. Sec. 28
1201.1-1(a), as in effect on January 1, 2025; 29
(ii) Any railroad owned by a port, city, or county in the state 30
of Washington; or 31
(iii) Any owner or lessee of rail siding, industrial spur, or 32
industry track, if the rail siding, industrial spur, or industry 33
track is located on or adjacent to a class II or class III railroad 34
in the state of Washington. 35
(c) "Industrial spur" means a secondary track used by railroads 36
and customers at a location to load and unload railcars without 37
interfering with other railroad operations. 38
p. 6 HB 1058
(d) "Siding" means a short section of track, distinct from a 1
mainline, branch line, or spur, connected by switches to a main track 2
and used for storage, passing, or other purposes. 3
(7) Credit under this section may not be earned for donations to 4
short line railroads owned by a class I railroad or any of its 5
subsidiaries. 6
(8) No person may claim a credit against taxes due under both 7
this chapter and chapter 82.16 RCW for the same donated materials.8
(9) To claim a credit under this chapter, a person must 9
electronically file with the department all returns, forms, and other 10
information the department requires in an electronic format as 11
provided and approved by the department. Any return, form, or 12
information required to be filed in an electronic format under this 13
section is not filed until received by the department in an 14
electronic format. For purposes of this subsection, "returns" has the 15
same meaning as "return" in RCW 82.32.050. 16
(10) The ability to earn credits under this section expires 17
January 1, 2038. No credit may be claimed on tax returns filed for 18
reporting periods beginning on or after January 1, 2043.19
NEW SECTION. Sec. 4. A new section is added to chapter 82.08 20
RCW to read as follows: 21
(1) The tax levied by RCW 82.08.020 does not apply to sales of 22
materials required for track maintenance to: 23
(a) Owners and operators of class II or class III railroads;24
(b) Any railroad or freight rail facility owned by a port, city, 25
or county in the state of Washington; or 26
(c) Any owner or lessee of a rail siding, industrial spur, or 27
industry track, if the rail siding, industrial spur, or industry 28
track is located on or adjacent to a class II or class III railroad 29
in the state of Washington. 30
(2) Sellers making tax-exempt sales under this section must 31
obtain an exemption certificate from the buyer in a form and manner 32
prescribed by the department. The seller must retain a copy of the 33
exemption certificate for the seller's files. Instead of an exemption 34
certificate, a seller may capture the relevant data elements as 35
allowed under the streamlined sales and use tax agreement.36
(3) For the purposes of this section, the following definitions 37
apply: 38
p. 7 HB 1058
(a) "Class I railroad" means a railroad that is classified by the 1
United States surface transportation board as a class I railroad, as 2
defined in 49 C.F.R. Sec. 1201.1-1(a), as in effect on January 1, 3
2025. 4
(b) "Class II or class III railroad" means railroads that are 5
classified by the United States surface transportation board as a 6
class II or class III railroad, as defined in 49 C.F.R. Sec. 7
1201.1-1(a), as in effect on January 1, 2025. 8
(c) "Freight rail facilities" means the infrastructure used to 9
transport freight by rail, specifically to rail yards, terminals, 10
sidings, and marshalling yards that play an important role in the 11
transportation and distribution and shipping of goods over long 12
distances. 13
(d) "Industrial spur" means a secondary track used by railroads 14
and customers at a location to load and unload railcars without 15
interfering with other railroad operations. 16
(e) "Materials required for track maintenance" means the 17
following items when used for purposes of track maintenance: Rail, 18
ties, tie plates, joint bars, fasteners, switches, ballast, subgrade, 19
roadbed, bridges, industrial leads, sidings, signs, safety barriers, 20
crossing signals and gates, and track. 21
(f) "Siding" means a short section of track, distinct from a 22
mainline, branch line, or spur, connected by switches to a main track 23
and used for storage, passing, or other purposes. 24
(4) This section does not apply to class I railroads or short 25
line railroads owned by a class I railroad or any of its 26
subsidiaries. 27
(5) This section expires January 1, 2037. 28
NEW SECTION. Sec. 5. A new section is added to chapter 82.12 29
RCW to read as follows: 30
(1) The provisions of this chapter do not apply to the use of 31
materials required for track maintenance by: 32
(a) Owners and operators of class II or class III railroads;33
(b) Any railroad or freight rail facility owned by a port, city, 34
or county in the state of Washington; or 35
(c) Any owner or lessee of a rail siding, industrial spur, or 36
industry track, if the rail siding, industrial spur, or industry 37
track is located on or adjacent to a class II or class III railroad 38
in the state of Washington. 39
p. 8 HB 1058
(2) For purposes of this section, the following definitions 1
apply: 2
(a) "Class I railroad" means a railroad that is classified by the 3
United States surface transportation board as a class I railroad, as 4
defined in 49 C.F.R. Sec. 1201.1-1(a), as in effect on January 1, 5
2025. 6
(b) "Class II or class III railroad" means railroads that are 7
classified by the United States surface transportation board as a 8
class II or class III railroad, as defined in 49 C.F.R. Sec. 9
1201.1-1(a), as in effect on January 1, 2025. 10
(c) "Freight rail facilities" means the infrastructure used to 11
transport freight by rail, specifically to rail yards, terminals, 12
sidings, and marshalling yards that play an important role in the 13
transportation and distribution and shipping of goods over long 14
distances. 15
(d) "Industrial spur" means a secondary track used by railroads 16
and customers at a location to load and unload railcars without 17
interfering with other railroad operations. 18
(e) "Materials required for track maintenance" has the same 19
meaning as in section 4 of this act. 20
(f) "Siding" means a short section of track, distinct from a 21
mainline, branch line, or spur, connected by switches to a main track 22
and used for storage, passing, or other purposes. 23
(3) This section does not apply to class I railroads or short 24
line railroads owned by a class I railroad or any of its 25
subsidiaries. 26
(4) This section expires January 1, 2037. 27
NEW SECTION. Sec. 6. A new section is added to chapter 82.16 28
RCW to read as follows: 29
(1) A credit is allowed against taxes due under this chapter for 30
expenditures made by an eligible taxpayer pursuant to subsection (2) 31
of this section. The credit is subject to a maximum annual credit 32
amount set forth in subsection (3) of this section.33
(2) Qualified expenditures incurred by an eligible taxpayer may 34
be used to generate a credit for the following amounts:35
(a) For qualified short line railroad maintenance expenditures, a 36
credit is allowed against the taxes due under this chapter in an 37
amount equal to 50 percent of the qualified short line railroad 38
maintenance expenditures. The amount of the credit earned in a 39
p. 9 HB 1058
calendar year may not exceed an amount equal to $2,500 multiplied by 1
the number of miles of railroad track owned or leased in the state by 2
the eligible taxpayer as of the close of the calendar year.3
(b) For qualified new rail development expenditures, a credit is 4
allowed against the taxes due under this chapter in an amount equal 5
to 50 percent of the new rail development expenditures of an eligible 6
taxpayer. 7
(c) For qualified railroad modernization and rehabilitation 8
expenditures, a credit is allowed against the taxes due under this 9
chapter in an amount equal to 50 percent of the qualified railroad 10
modernization and rehabilitation expenditures by an eligible 11
taxpayer. 12
(3) The total credit amount approved under subsection (2) of this 13
section and section 2(2) of this act may not exceed $500,000 for each 14
eligible taxpayer in a calendar year. Credits are available on a 15
first-in-time basis. The department must disallow any credits, or 16
portions thereof, that would cause the total amount of credits 17
approved under subsection (2) of this section and section 2 (2) of 18
this act to exceed $8,000,000 during any calendar year.19
(4) The credit claimed may not exceed the tax that would 20
otherwise be due under this chapter. Refunds may not be granted in 21
the place of credits. Any amount of credit earned under this section 22
not claimed by the taxpayer in one calendar year may be carried 23
forward for no more than five calendar years immediately following 24
the year that the credit was earned. 25
(5)(a) An eligible taxpayer may transfer all or a portion of the 26
credit approved under this section to any taxpayer subject to the tax 27
imposed under this chapter at any time during the calendar year in 28
which the credit is approved by the department and five calendar 29
years following the year that the credit is approved.30
(b) To transfer all or any portion of an approved credit, the 31
taxpayer originally allowed the credit and the subsequent transferee 32
must jointly file a credit transfer application with the department. 33
The application must include: 34
(i) The names, addresses, and taxpayer identification numbers of 35
the parties to the transfer; 36
(ii) The amount of the credit being transferred;37
(iii) The year the credit was originally approved by the 38
department for use by the transferring taxpayer; 39
p. 10 HB 1058
(iv) The tax year or years for which the credit may be claimed; 1
and 2
(v) Any other information or documents the department may 3
require. 4
(c) No credit or portion thereof may be transferred more than 5
once. 6
(6) The department must administer the credit. To claim or 7
transfer a credit under this section, the taxpayer applying must 8
complete an application for credit based on qualified expenditures 9
incurred by the eligible taxpayer the previous calendar year. The 10
department must rule on applications within 60 days of receipt. The 11
department may extend the time of processing any application upon 12
notice to the taxpayer and by providing the taxpayer an explanation 13
on why the application processing cannot be completed on time.14
(7) For the purposes of this section, the following definitions 15
apply: 16
(a) "Class I railroad" means a railroad that is classified by the 17
United States surface transportation board as a class I railroad, as 18
defined in 49 C.F.R. Sec. 1201.1-1(a), as in effect on January 1, 19
2025. 20
(b) "Eligible taxpayer" means: 21
(i) Any railroad subject to the tax under this chapter that is 22
classified by the United States surface transportation board as a 23
class II or class III railroad, as defined in 49 C.F.R. Sec. 24
1201.1-1(a), as in effect on January 1, 2025; 25
(ii) Any railroad owned by a port, city, or county in the state 26
of Washington; or 27
(iii) Any owner or lessee of rail siding, industrial spur, or 28
industry track, if the rail siding, industrial spur, or industry 29
track is located on or adjacent to a class II or class III railroad 30
in the state of Washington. 31
(c) "Industrial spur" means a secondary track used by railroads 32
and customers at a location to load and unload railcars without 33
interfering with other railroad operations. 34
(d) "Qualified new rail development expenditures" means 35
expenditures for new rail development by an eligible taxpayer, which 36
includes the construction of new track, industrial leads, switches, 37
industrial spurs, sidings, rail loading docks, and transloading 38
structures involved with providing rail services to new customer 39
p. 11 HB 1058
locations or existing customer expansions in the state by an eligible 1
taxpayer. 2
(e) "Qualified railroad modernization and rehabilitation 3
expenditures" means expenditures by an eligible taxpayer to upgrade 4
less than 90 pound rail and switches, 286,000 pound capacity rail 5
upgrades to the mainline track, rail and tie replacement projects, 6
track capacity enhancements, bridge rehabilitation or bridge 7
replacement projects, natural disaster projects, or other track-8
related projects determined to enhance or modernize the existing 9
track infrastructure in the state by an eligible taxpayer.10
(f) "Qualified short line railroad maintenance expenditures" 11
means expenditures for railroad infrastructure maintenance including, 12
but not limited to, rail, ties, tie plates, joint bars, fasteners, 13
switches, ballast, subgrade, roadbed, bridges, industrial leads, 14
sidings, signs, safety barriers, crossing signals and gates, and 15
related track structures owned or leased by a class II or class III 16
railroad. 17
(g) "Siding" means a short section of track, distinct from a 18
mainline, branch line, or spur, connected by switches to a main track 19
and used for storage, passing, or other purposes. 20
(8) Qualified expenditures, as defined in subsection (7)(d), (e), 21
and (f) of this section, do not include expenditures used to generate 22
a federal tax credit or expenditures funded by a state or federal 23
grant. 24
(9) This section does not apply to class I railroads or short 25
line railroads owned by a class I railroad or any of its 26
subsidiaries. 27
(10) No person may claim a credit against taxes due under both 28
this chapter and chapter 82.04 RCW for the same qualified 29
expenditures. 30
(11) To claim a credit under this chapter, a taxpayer must 31
electronically file with the department all returns, forms, and other 32
information the department requires in an electronic format as 33
provided and approved by the department. Any return, form, or 34
information required to be filed in an electronic format under this 35
section is not filed until received by the department in an 36
electronic format. For purposes of this subsection, "returns" has the 37
same meaning as "return" in RCW 82.32.050. 38
(12) The ability to earn credits for qualifying expenditures 39
under this section expires January 1, 2037. No credit may be claimed 40
p. 12 HB 1058
on tax returns filed for reporting periods beginning on or after 1
January 1, 2043. 2
NEW SECTION. Sec. 7. A new section is added to chapter 82.16 3
RCW to read as follows: 4
(1) Any company that recycles railroad material is eligible for a 5
credit as provided in this section if, on or after the effective date 6
of this section, the company transfers to an eligible taxpayer rail, 7
ties, tie plates, joint bars, fasteners, switches, ballast, or other 8
equipment or materials that are part of the rail infrastructure to be 9
installed on tracks used by class II and class III railroads.10
(2) The credit is equal to the fair market value of the donated 11
materials used for track maintenance, expansion, or modernization. 12
Materials must be given to a qualifying recipient without 13
consideration to receive a credit. The department must provide in 14
rule a standard for determining the fair market value of donated 15
materials under this section. 16
(3)(a) A company that recycles railroad material may transfer all 17
or a portion of the credit earned under this section to any taxpayer 18
subject to the tax imposed under this chapter at any time during the 19
year in which the credit is earned and five years following the year 20
that the credit is earned. 21
(b) To transfer all or any portion of a credit earned, the 22
taxpayer originally allowed the credit and the subsequent transferee 23
must jointly file a credit transfer application with the department. 24
The application must include: 25
(i) The names, addresses, and taxpayer identification numbers of 26
the parties to the transfer; 27
(ii) The amount of the credit being transferred;28
(iii) The year the credit was originally earned by the 29
transferring taxpayer; 30
(iv) The tax year or years for which the credit may be claimed; 31
and 32
(v) Any other information or documents the department may 33
require. 34
(c) No credit or portion thereof may be transferred more than 35
once. 36
(d) No credit transfer applications under (b) of this subsection 37
(3) may be submitted for qualifying materials donated after December 38
31, 2036. 39
p. 13 HB 1058
(4) The department must administer the credit. 1
(5) The credit claimed may not exceed the tax that would 2
otherwise be due under this chapter. Refunds may not be granted in 3
the place of credits. Any amount of credit earned under this section 4
not claimed by the person in one calendar year may be carried forward 5
for no more than five calendar years immediately following the year 6
that the credit was earned. 7
(6) For purposes of this section, the following definitions 8
apply: 9
(a) "Class I railroad" means a railroad that is classified by the 10
United States surface transportation board as a class I railroad, as 11
defined in 49 C.F.R. Sec. 1201.1-1(a), as in effect on January 1, 12
2025. 13
(b) "Eligible taxpayer" means: 14
(i) Any railroad subject to the tax under this chapter that is 15
classified by the United States surface transportation board as a 16
class II or class III railroad, as defined in 49 C.F.R. Sec. 17
1201.1-1(a), as in effect on January 1, 2025; 18
(ii) Any railroad owned by a port, city, or county in the state 19
of Washington; or 20
(iii) Any owner or lessee of rail siding, industrial spur, or 21
industry track, if the rail siding, industrial spur, or industry 22
track is located on or adjacent to a class II or class III railroad 23
in the state of Washington. 24
(c) "Industrial spur" means a secondary track used by railroads 25
and customers at a location to load and unload railcars without 26
interfering with other railroad operations. 27
(d) "Siding" means a short section of track, distinct from a 28
mainline, branch line, or spur, connected by switches to a main track 29
and used for storage, passing, or other purposes. 30
(7) Credit under this section may not be earned for donations to 31
short line railroads owned by a class I railroad or any of its 32
subsidiaries. 33
(8) No person may claim a credit against taxes due under both 34
this chapter and chapter 82.04 RCW for the same donated materials.35
(9) To claim a credit under this chapter, a person must 36
electronically file with the department all returns, forms, and other 37
information the department requires in an electronic format as 38
provided and approved by the department. Any return, form, or 39
information required to be filed in an electronic format under this 40
p. 14 HB 1058
section is not filed until received by the department in an 1
electronic format. For purposes of this subsection, "returns" has the 2
same meaning as "return" in RCW 82.32.050. 3
(10) The ability to earn credits under this section expires 4
January 1, 2038. No credit may be claimed on tax returns filed for 5
reporting periods beginning on or after January 1, 2043.6
NEW SECTION. Sec. 8. (1) This section is the tax preference 7
performance statement for the tax preferences contained in 8
chapter . . ., Laws of 2025 (this act). This performance statement is 9
only intended to be used for subsequent evaluation of the tax 10
preferences. It is not intended to create a private right of action 11
by any party or be used to determine eligibility for preferential tax 12
treatment.13
(2) The legislature categorizes the tax preferences in this act 14
as ones intended to accomplish a general purpose, as indicated in RCW 15
82.32.808(2)(f). 16
(3) It is the legislature's specific public policy objective to 17
promote economic development and reduce impacts of freight 18
transportation on roads and the environment. 19
(4) In conducting its review under this section, the joint 20
legislative audit and review committee should consider, among other 21
measures: 22
(a) The total miles capable of transporting 286,000 pound 23
railcars; 24
(b) The number of miles of track rehabilitated to 90 pound rail 25
or greater; 26
(c) The number of ties replaced; 27
(d) The amount of ballast replaced; 28
(e) The number of bridges returned from out of service or able to 29
operate heavier loaded equipment; 30
(f) The number of switches installed; 31
(g) Any related safety benefits of addressing at-grade crossings;32
(h) The number of rail cars from increased economic activity;33
(i) Any improvement in federal railroad administration track 34
classification designation up to and including class II track and the 35
ability to operate at greater speeds; 36
(j) The amount of steel or ties made obsolete pursuant to section 37
2 of this act that are reused by a class II or class III railroad, as 38
defined in section 5 of this act, within Washington;39
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(k) The number of prevailing wage jobs associated with new rail 1
development, modernization, and rehabilitation projects by taxpayers 2
using the tax preferences under this act; and 3
(l) The number of additional rail cars utilizing class I 4
railroads as a result of new development, modernization, and 5
rehabilitation projects by taxpayers using the tax preferences under 6
this act. 7
(5) In order to obtain the data necessary to perform the review 8
in subsection (4) of this section, the joint legislative audit and 9
review committee may refer to any data collected by the state.10
NEW SECTION. Sec. 9. If specific funding for the purposes of 11
this act, referencing this act by bill or chapter number, is not 12
provided by June 30, 2025, in the omnibus appropriations act, this 13
act is null and void.14
NEW SECTION. Sec. 10. Sections 4, 5, and 8 of this act take 15
effect August 1, 2025.16
NEW SECTION. Sec. 11. Sections 3 and 7 of this act take effect 17
July 1, 2026.18
NEW SECTION. Sec. 12. Sections 2 and 6 of this act take effect 19
January 1, 2026.20
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